TIDMMIG3
RNS Number : 6444R
Maven Income and Growth VCT 3 PLC
01 March 2019
Maven Income and Growth VCT 3 PLC
Final results for the year ended 30 November 2018
The Directors report the Company's financial results for the
year ended 30 November 2018
Highlights
-- NAV total return at the year end of 143.66p per share (2017: 143.57p)
-- NAV at year end of 61.49p per share (2017: 72.35p), after
payment of dividends totalling 10.95p per share during the
period
-- Annual dividend of 10.95p per share (2017: 14.52p)
-- Offer for Subscription fully subscribed and raised GBP20 million
-- Net assets increased to GBP42.41 million
-- Completion of 17 VCT qualifying new and follow-on investments
-- Four notable realisations achieved
Strategic Report
Chairman's Statement
Your Board is pleased to report on another year of positive
performance with NAV total return increased to 143.66p per share
and an annual dividend of 10.95p per share. During the period under
review, your Company completed an Offer for Subscription which
raised a total of GBP20 million of new capital for investment. The
underlying investee company portfolio has seen further expansion
during the year, with the addition of nine new private company
assets operating across a broad range of sectors, alongside eight
follow-on investments in existing portfolio companies. Several
profitable realisations were also completed, which supported the
payment of the annual dividend. Over the past two financial years,
Shareholders have received 25.47p per share in enhanced dividends,
arising from a build-up of distributable reserves following a
number of profitable exits and the requirement to maintain ongoing
compliance with the VCT regulations. While this level of
distribution is unlikely to be sustained, your Board remains
committed to making regular tax-free payments wherever possible,
with the potential for further distributions when realisations are
achieved.
Your Company continues to be focused on steadily growing
Shareholder value and building a broadly based and diversified
portfolio of investments, which will support that objective.
Central to this was the success of the Offer for Subscription,
which closed in early April 2018 at full capacity, including
utilisation of the over-allotment facility, raising GBP20 million.
With net assets at the period end in excess of GBP42 million, and
good levels of liquidity, your Company is now well placed to
continue to deploy these funds in a wide range of carefully
selected VCT qualifying growth companies that offer the prospect of
capital gain.
The Directors are encouraged by the level of investment activity
that has been achieved during the year, particularly given the
process for securing Advanced Assurance clearance from HM Revenue
and Customs (HMRC), which has continued to cause delays to the
completion of certain investments. Following enactment of the
Finance Act 2015, which altered the investment parameters of VCT
qualifying transactions, Maven has successfully adapted its deal
origination strategy whilst concurrently expanding its investment
team and nationwide presence to enable access to the widest
possible pool of qualifying opportunities. Based on the pipeline of
live transactions currently under review, your Board anticipates
sustaining a healthy rate of investment in the new financial year,
supplemented by follow-on commitments to support existing portfolio
companies that are making identifiable commercial progress. It is
also possible that your Company may make a number of investments in
qualifying AIM quoted companies, for which the Manager has an
established team with good knowledge of the market.
Details of the principal Key Performance Indicators (KPIs) can
be found in the Business Report and a summary of the Alternative
Performance Measures (APMs) can be found in the Financial
Highlights in the Annual Report. The Investment Manager's Review in
the Annual Report contains a detailed analysis of portfolio
developments. It is pleasing to report that, despite the political
and economic uncertainty that has continued to surround the UK's
intended exit from the European Union (EU), the portfolio of
investee companies has generally performed in line with
expectations. The continuing positive performance achieved by a
number of established private companies has enabled the valuations
of these assets to be increased. The younger and earlier stage
investee companies have generally made satisfactory progress,
although it may take time for this to translate into meaningful
uplifts in valuation. The Board and the Manager will maintain a
conservative approach to valuing these assets, holding them at
cost, or cost less provision, until there is clear evidence of
measurable progress, or a specific event from which a new valuation
level can be supported. Encouragingly, the oil & gas portfolio
has witnessed a further steady improvement in trading performance,
continuing the trend of the previous year. Elsewhere in the
portfolio, there are a small number of investments that are
operating behind plan or have experienced a market adjustment that
has influenced performance and, as a result, the valuations of
these assets have been reduced.
This has also been an active period for realisations, reflecting
the maturing profile of a number of portfolio assets. As previously
reported, in December 2017 the holdings in SPS, the UK's largest
provider of promotional merchandise, and John McGavigan, a
manufacturer and supplier of plastic components for the global
automotive industry, were exited at premiums to carrying value
delivering total returns of 2.5 times and 4.2 times cost
respectively over the lives of these investments. In February 2018,
the exit was completed from Endura, a designer and manufacturer of
high performance cycling apparel and accessories, for a total
return of 1.6 times cost over the holding period. In October 2018,
the holding in Cursor Controls, a niche manufacturer of trackballs,
track pads and keyboards for industrial applications, was exited at
a premium to carrying value, generating a total return of 2.7 times
cost over the three-year investment period. The Board is aware that
discussions are underway regarding further potential exits from
other portfolio companies, although there can be no certainty that
these will result in realisations.
Dividends
As a result of the profitable exits noted above, and in order to
ensure ongoing compliance with the VCT regulations, the Directors
considered it necessary to distribute an enhanced level of interim
dividends.
Accordingly, a first interim dividend in respect of the year
ended 30 November 2018 of 5.70p per Ordinary Share was paid on 13
April 2018 to Shareholders on the register at close of business on
16 March 2018. A second interim dividend, of 5.25p per Ordinary
Share, was paid on 22 June 2018 to Shareholders on the register at
close of business on 25 May 2018. As no final dividend is proposed,
total distributions for the year are 10.95p per Ordinary Share,
representing a tax-free yield of 19.21% based on a year-end closing
mid-market price of 57.00p. Since the Company's launch, and after
receipt of the payments noted above, Shareholders have received
82.17p per share in tax-free dividends. It should be noted that the
effect of paying dividends is to reduce the NAV of the Company by
the total cost of the distribution.
Decisions on future distributions will take into consideration
the availability of surplus revenue, the adequacy of reserves and
the VCT qualifying levels of the portfolio, all of which are kept
under close and regular review by the Board and the Manager.
Decisions on future distributions will take into consideration the
availability of surplus revenue, the adequacy of reserves and the
VCT qualifying levels of the portfolio, all of which are kept under
close and regular review by the Board and the Manager. To this end,
the Directors are proposing that Special Resolutions are passed at
the Annual General Meeting (AGM), seeking Shareholders' approval to
cancel the share premium account and the capital redemption reserve
of the Company, pursuant to the Companies Act 2006 and subject to
sanction by the High Court, to create a further pool of
distributable reserves that can be used for future distributions.
As the portfolio continues to evolve, and a greater proportion of
holdings are invested in younger and earlier stage companies, there
may be fluctuations in the quantum and timing of future dividend
payments, which could ultimately be more closely linked to
realisation activity. The Board and the Manager will ensure that
this is carefully monitored, in line with your Company's investment
objective. As the portfolio continues to evolve, and a greater
proportion of holdings are invested in younger and earlier stage
companies, there may be fluctuations in the quantum and timing of
future dividend payments, which could ultimately be more closely
linked to realisation activity. The Board and the Manager will
ensure that this is carefully monitored, in line with your
Company's investment objective.
Dividend Investment Scheme (DIS)
Your Company has in place a DIS through which Shareholders may
elect to have their dividend payments used to apply for new
Ordinary Shares issued by the Company under the standing authority
requested from Shareholders at annual general meetings. Shares
issued under the DIS should qualify for VCT tax reliefs applicable
for the tax year in which they are allotted.
Shareholders who wish to participate in respect of future
dividends should ensure that a mandate form for DIS election, or
CREST instruction as appropriate, is submitted to the Registrar
(Link Market Services). Full details of the scheme are available
from the Company's website, together with a mandate form. A DIS
election can also be made using the Link share portal at
www.signalshares.com.
Fund Raising
On 22 September 2017, the Directors of your Company, together
with the board of Maven Income and Growth VCT 4 PLC, launched an
Offer for Subscription for new Ordinary Shares for up to GBP30
million, in aggregate, with total over-allotment facilities of up
to GBP10 million.
On 5 April 2018, your Board was pleased to announce that the
Offer was fully subscribed having raised GBP20 million in total,
including the full utilisation of the over-allotment facility.
During the period, the Company issued 18,433,172 new Ordinary
Shares for the 2017/2018 tax year, with a further 3,305,548 new
Ordinary Shares issued for the 2018/2019 tax year. The programme
for investing this capital has commenced and the Directors are
encouraged by the positive rate of new investment that has been
achieved to date, which is expected to continue in the new
financial year.
Further details regarding the new Ordinary Shares issued under
the Offer for Subscription can be found in Note 12 to the Financial
Statements in the Annual Report.
Share Buy-backs
Shareholders should be aware that the Board's primary objective
is for the Company to retain sufficient liquid assets for making
investments in line with its stated policy, and for the continued
payment of dividends. However, the Directors also acknowledge the
need to maintain an orderly market in the Company's shares and have
delegated authority to the Manager to buy back shares in the market
for cancellation or to be held in treasury, subject always to such
transactions being in the best interests of Shareholders.
It is intended that, subject to market conditions, available
liquidity and the maintenance of the Company's VCT status, shares
will be bought back at prices representing a discount of between 5%
and 10% to the prevailing NAV per share.
Regulatory Developments
Following legislative changes introduced by the Finance Act
2015, with further amendments included in the Finance Act 2018, it
is reassuring to report that the Finance (No. 3) Bill 2017-2019
does not propose any further amendments to the legislation
governing VCTs. Your Company is well positioned to accommodate the
provisions of the Finance Act 2018, in particular the requirement
for a VCT to hold 80% of its investments in qualifying holdings for
periods ending after 6 April 2019. For your Company, this will be
applicable from 30 November 2019 and progress towards this target
is being monitored closely.
The General Data Protection Regulation (GDPR) came into force on
25 May 2018, replacing the Data Protection Act 1998. During the
year the Manager worked with the third parties that process
Shareholders' personal data to ensure that their rights under the
new regulation are respected.
In July 2018, the Financial Reporting Council published an
update of the UK Corporate Governance Code, which focusses on the
application and reporting of the updated Principles. The 2018 Code
applies to all companies with a Premium Listing and is applicable
for all accounting periods beginning on or after 1 January 2019.
The Board will consider the implications of the Code and take
appropriate action as required.
The Future
Your Board is encouraged by the progress achieved during the
financial year and remains confident in your Company's future
prospects, despite the prevailing macro-economic uncertainty
associated with the UK's withdrawal from the EU. The key objectives
for the year ahead are to maintain a steady investment rate, to
ensure that the capital deployment targets are achieved, and that
the portfolio continues to grow, by securing some of the best
growth companies across the UK regions. It may, however, take time
for the full benefits of this more active investment phase to
translate into a meaningful increase in Shareholder returns, as the
growth profile of younger and earlier stage companies is more
difficult to predict. During this transitional phase, with over 60%
of the holdings in the portfolio, by value, still invested in more
established private companies, there remains a stable and mature
asset base that is capable of continuing to support Shareholder
returns in the years ahead.
Atul Devani
Chairman
1 March 2019
Business Report
This Business Report is intended to provide an overview of the
strategy and business model of the Company, as well as the key
measures used by the Directors in overseeing its management. The
Company is a venture capital trust and invests in accordance with
the investment objective set out in this Business Report.
Investment Objective
The Company aims to achieve long-term capital appreciation and
generate income for Shareholders.
Business Model and Investment Policy
The Company intends to achieve its objective by:
-- investing the majority of its funds in a diversified
portfolio of shares and securities in smaller, unquoted UK
companies and AIM/NEX quoted companies which meet the criteria for
VCT qualifying investments and have strong growth potential;
-- investing no more than GBP1.25 million in any company in one
year and no more than 15% of the Company's assets by cost in one
business at any time; and
-- borrowing up to 15% of net asset value, if required and only
on a selective basis, in pursuit of its investment strategy.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company are as
follows:
Investment Risk
The majority of the Company's investments are in small and
medium sized unquoted UK companies and AIM/NEX quoted companies
which, by their nature, carry a higher level of risk and lower
liquidity than investments in large quoted companies. The Board
aims to limit the risk attached to the investment portfolio as a
whole by ensuring that a robust structured selection, monitoring
and realisation process is applied. The Board reviews the
investment portfolio with the Manager on a regular basis.
The Company manages and minimises investment risk by:
-- diversifying across a large number of companies;
-- diversifying across a range of economic sectors;
-- actively and closely monitoring the progress of investee companies;
-- co-investing with other clients of Maven and other VCT managers;
-- ensuring valuations of underlying investments are made fairly
and reasonably (see Notes to the Financial Statements 1(e) and 1(f)
for further details);
-- taking steps to ensure that share price discount is managed appropriately; and
-- choosing and appointing an FCA authorised investment manager
with the appropriate skills, experience and resources required to
achieve the investment objective, with ongoing monitoring to ensure
the Manager is performing in line with expectations.
Financial and Liquidity Risk
As most of the investments require a mid to long term commitment
and are relatively illiquid, the Company retains a portion of the
portfolio in cash and listed investments in order to finance any
new unquoted investment opportunities. The Company has only limited
direct exposure to currency risk and does not enter into any
derivative transactions.
Economic Risk
The valuation of investment companies may be affected by
underlying economic conditions such as fluctuating interest rates
and the availability of bank finance. The economic and market
environment is kept under constant review and the investment
strategy of the Company is adapted so far as possible to mitigate
emerging risks.
Credit Risk
The Company may hold financial instruments and cash deposits and
is dependent on counterparties discharging their agreed
responsibilities. The Directors consider the creditworthiness of
the counterparties to such instruments and seek to ensure that
there is no undue concentration of exposure to any one party.
Internal Control Risk
The Board regularly reviews the system of internal controls,
both financial and non-financial, operated by the Company, the
Manager and other key third party outsourcers such as the Custodian
and Registrar. These include controls designed to ensure that the
Company's assets are safeguarded, all records are complete and
accurate and that the third parties have adequate controls in place
to prevent data protection and cyber security failings.
VCT Qualifying Status Risk
The Company operates in a complex regulatory environment and
faces a number of related risks, including:
-- becoming subject to capital gains tax on the sale of its
investments as a result of a breach of Section 274 of the Income
Tax Act 2007;
-- loss of VCT status and the consequential loss of tax reliefs
available to Shareholders as a result of a breach of the VCT
Regulations;
-- loss of VCT status and reputational damage as a result of
serious breach of other regulations such as the FCA Listing Rules
and the Companies Act 2006 (the Companies Act); and
-- increased investment restrictions resulting from the EU State
Aid Rules incorporated by the Finance (No. 2) Act 2015 and the
Finance Act 2018.
The Board works closely with the Manager to ensure compliance
with all applicable and upcoming legislation, such that VCT
qualifying status is maintained. Further information on the
management of this risk is detailed under other headings in this
Business Report.
Legislative and Regulatory Risk
In order to maintain its approval as a VCT, the Company is
required to comply with current VCT legislation in the UK as well
as the EU State Aid Rules. Changes to either legislation could have
an adverse impact on Shareholder investment returns, whilst
maintaining the Company's VCT status. The Board and the Manager
continue to make representations where appropriate, either directly
or through relevant industry bodies such as the Association of
Investment Companies (AIC) or the British Venture Capital
Association (BVCA).
The Company has retained Philip Hare & Associates LLP as its
principal VCT adviser and also uses the services of a number of
other VCT advisers on a transactional basis.
Breaches of other regulations including, but not limited to, the
Companies Act, the FCA Listing Rules, FCA Disclosure Guidance and
Transparency Rules, the GDPR, or the Alternative Investment Fund
Managers Directive (the AIFMD), could lead to a number of
detrimental outcomes and reputational damage. Breaches of controls
by service providers to the Company could also lead to reputational
loss or damage.
The AIFMD, which regulates the management of alternative
investment funds, including VCTs, introduced an authorisation and
supervisory regime for all investment companies in the EU. The
Company was approved by the FCA as a self-managed small registered
UK AIFM under the AIFMD.
The Company is also required to comply with tax legislation
under the Foreign Account Tax Compliance Act and the Common
Reporting Standards. The Company has appointed Link Market Services
to act on its behalf to report annually to HMRC and ensure
compliance with this legislation.
Political Risk
Following the referendum held on 23 June 2016, the UK voted to
leave the EU. The two year period for negotiating the Withdrawal
Agreement expires on 29 March 2019. The full political, economic
and legal consequences of leaving the EU are not yet known. It is
possible that investments in the UK may be more difficult to value
and to assess for suitability of risk, harder to buy or sell, and
may be subject to greater or more frequent rises and falls in
value. In the longer term, there is likely to be a period of
uncertainty as the UK seeks to negotiate its ongoing relationship
with the EU and other global trade partners.
In the future, UK laws and regulations, including those relating
to investment companies and AIFMs, may diverge from those of the
EU. This may lead to changes in the operation of the Company, the
rights of investors, or the list of territories in which the shares
of the Company can be promoted or sold.
The Board regularly reviews the political situation, together
with any associated changes to the economic, regulatory and
legislative environment, in order to ensure that any risks are
mitigated as effectively as possible.
An explanation of certain economic and financial risks and how
they are managed is contained in Note 16 to the Financial
Statements in the Annual Report.
Statement of Compliance with Investment Policy
The Company is adhering to its stated investment policy and
managing the risks arising from it. This can be seen in various
tables and charts throughout the Annual Report, from information
provided in the Chairman's Statement and in the Investment
Manager's Review. A review of the Company's business, its position
as at 30 November 2018 and its performance during the year then
ended is included in the Chairman's Statement, which also includes
an overview of the Company's business model and strategy.
The management of the investment portfolio has been delegated to
Maven, which also provides company secretarial, administrative and
financial management services to the Company. The Board is
satisfied with the depth and breadth of the Manager's resources and
its nationwide network of offices, which supply new deals and
enable it to monitor the geographically widespread portfolio of
companies effectively.
The Investment Portfolio Summary in the Annual Report discloses
the investments in the portfolio and the degree of co-investment
with other clients of the Manager. The tabular analysis of the
unlisted and quoted portfolio shows that the portfolio is
diversified across a variety of sectors and deal types. The level
of qualifying investments is monitored by the Manager on a daily
basis and reported to the Audit & Risk Committee quarterly, or
as required.
Key Performance Indicators
During the year, the net return on ordinary activities before
taxation was GBP74,000 (2017: GBP27,000), gains on investment were
GBP521,000 (2017: GBP153,000) and earnings per share were 0.12p
(2017: 0.07p). The Directors also use a number of Alternative
Performance Measures (APMs) in order to assess the Company's
success in achieving its objectives as these are considered to be
more appropriate long-term measures. The APMs are viewed by the
Board as additional Key Performance Indicators that enable
Shareholders and prospective investors to gain an understanding of
the Company's business, and are as follows:
-- NAV total return;
-- annual yield;
-- share price discount to NAV;
-- investment income; and
-- operational expenses.
The NAV total return is a measure of Shareholder value that
includes both the current NAV per share and the sum of dividends
paid to date. The annual yield is the total dividends paid for the
financial year, expressed as a percentage of the share price at the
year end date. The Directors seek to pay dividends to provide a
yield and comply with the VCT rules, taking account of the level of
distributable reserves, profitable realisations in each accounting
period and the Company's future cash flow projections. The share
price discount to NAV is the percentage by which the mid-market
price of an investment is lower than the NAV per share. A
historical record of these measures is shown in the Financial
Highlights in the Annual Report. The change in the profile of the
portfolio is reflected in the Summary of Investment Changes.
Definitions of these APMs can be found in the Glossary in the
Annual Report. The Board reviews the Company's investment income
and operational expenses on a quarterly basis as the Directors
consider that both of these elements are important components in
the generation of Shareholder returns. Further information can be
found in Notes 2 and 4 to the Financial Statements in the Annual
Report.
There is no VCT index against which to compare the performance
of the Company. However, for reporting to the Board and
Shareholders, the Manager uses comparisons with the most
appropriate index, being the FTSE AIM All-Share Index. The
Directors also consider non-financial performance measures such as
the flow of investment proposals and ranking of the VCT sector by
independent analysts.
In addition, the Directors consider economic, regulatory and
political trends and factors that may impact on the Company's
future development and performance.
Valuation Process
Investments held by Maven Income and Growth VCT 3 PLC in
unquoted companies are valued in accordance with the International
Private Equity and Venture Capital Valuation Guidelines.
Investments quoted or traded on a recognised stock exchange,
including AIM, are valued at their bid prices.
Share Buy-backs
At the forthcoming Annual General Meeting (AGM), the Board will
seek the necessary Shareholder authority to continue to conduct
share buy-backs under appropriate circumstances.
Employee, Environmental and Human Rights Policy
The Company has no direct employee or environmental
responsibilities, nor is it responsible for the emission of
greenhouse gases. The Board's principal responsibility to
Shareholders is to ensure that the investment portfolio is managed
and invested properly. As the Company has no employees, it has no
requirement to report separately on employment matters. The
management of the portfolio is undertaken by the Manager through
members of its portfolio management team. The Manager engages with
the Company's underlying investee companies in relation to their
corporate governance practices and in developing their policies on
social, community and environmental matters and further information
may be found in the Statement of Corporate Governance. In light of
the nature of the Company's business, there are no relevant human
rights issues and, therefore, the Company does not have a human
rights policy.
Auditor
The Company's Auditor is required to report if there are any
material inconsistencies between the content of the Strategic
Report and the Financial Statements. The Independent Auditor's
Report can be found in the Annual Report.
Future Strategy
The Board and Manager intend to maintain the policies set out
above for the year ending 30 November 2019, as it is believed that
these are in the best interest of Shareholders.
Approval
The Business Report, and the Strategic Report as a whole, was
approved by the Board of Directors and signed on its behalf by:
Atul Devani
Director
1 March 2019
Income Statement
For the Year Ended 30 November 2018
Year ended 30 November Year ended 30 November
2018 2017
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- -------- -------- -------- -------- --------
Gains on investments - 521 521 - 153 153
Income from investments 984 - 984 1,047 - 1,047
Other income 35 - 35 14 - 14
Investment management fees (214) (854) (1,068) (179) (717) (896)
Other expenses (398) - (398) (291) - (291)
---------------------------------- -------- -------- -------- -------- -------- --------
Net return on ordinary activities 407 (333) 74 591 (564) 27
before taxation
Tax on ordinary activities (71) 71 - (103) 103 -
---------------------------------- -------- -------- -------- -------- -------- --------
Return attributable to Equity
Shareholders 336 (262) 74 488 (461) 27
---------------------------------- -------- -------- -------- -------- -------- --------
Earnings per share (pence) 0.54 (0.42) 0.12 1.20 (1.13) 0.07
---------------------------------- -------- -------- -------- -------- -------- --------
All gains and losses are recognised in the Income Statement.
All items in the above statement are derived from continuing
operations. The Company has only one class of business and one
reportable segment, the results of which are set out in the Income
Statement and Balance Sheet. The Company derives its income from
investments made in shares, securities and bank deposits.
There are no potentially dilutive capital instruments in issue
and, therefore, no diluted earnings per share figures are relevant.
The basic and diluted earnings per share are, therefore,
identical.
The accompanying Notes are an integral part of the Financial
Statements and can be found in full in the Annual Report.
Statement of Changes in Equity
Year Ended 30 November 2018
Share Capital Capital Special Capital
Share premium reserve reserve distributable redemption Revenue
CapitalGBP'000 account realised unrealised reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------------- -------- --------- ----------- -------------- ----------- --------- ---------
At 30 November
2017 4,702 18,035 (5,989) (62) 15,749 819 761 34,015
Net return - - 2,734 (2,996) - - 336 74
Dividends paid - - (6,529) - - - (241) (6,770)
Repurchase and
cancellation of
shares (71) - - - (426) 71 - (426)
Net proceeds of
share issue 2,174 12,793 - - - - - 14,967
Net proceeds of
DIS issue 92 457 - - - - - 549
---------------- --------------- -------- --------- ----------- -------------- ----------- --------- ---------
At 30 November
2018 6,897 31,285 (9,784) (3,058) 15,323 890 856 42,409
---------------- --------------- -------- --------- ----------- -------------- ----------- --------- ---------
Year Ended 30 November 2017
Share Capital Capital Special Capital
Share premium reserve reserve distributable redemption Revenue
CapitalGBP'000 account realised unrealised reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------------- -------- --------- ----------- -------------- ----------- --------- ---------
At 30 November
2016 4,093 13,820 (2,115) 3,499 16,251 752 720 37,020
Net return - - 3,100 (3,561) - - 488 27
Dividends paid - - (6,974) - - - (447) (7,421)
Repurchase and
cancellation of
shares (67) - - - (502) 67 - (502)
Net proceeds of
share issue 650 4,042 - - - - - 4,692
Net proceeds of
DIS issue 26 173 - - - - - 199
---------------- --------------- -------- --------- ----------- -------------- ----------- --------- ---------
At 30 November
2017 4,702 18,035 (5,989) (62) 15,749 819 761 34,015
---------------- --------------- -------- --------- ----------- -------------- ----------- --------- ---------
The accompanying Notes are an integral part of the Financial
Statements and can be found in full in the Annual Report.
Balance Sheet
As at 30 November 2018
30 November 2018 30 November 2017
GBP'000 GBP'000
------------------------------------ ---------------- ----------------
Fixed assets 21,108 24,335
Investments at fair value through
profit or loss 358 469
Current assets 20,979 9,246
Debtors
Cash
------------------------------------ ---------------- ----------------
Creditors 21,337 9,715
Amounts falling due within one
year (36) (35)
------------------------------------ ---------------- ----------------
Net current assets 21,301 9,680
------------------------------------ ---------------- ----------------
Net assets 42,409 34,015
------------------------------------ ---------------- ----------------
Capital and reserves
Called up share capital 6,897 4,702
Share premium account 31,285 18,035
Capital reserve - realised (9,784) (5,989)
Capital reserve - unrealised (3,058) (62)
Special distributable reserve 15,323 15,749
Capital redemption reserve 890 819
Revenue reserve 856 761
------------------------------------ ---------------- ----------------
Net assets attributable to Ordinary
Shareholders 42,409 34,015
------------------------------------ ---------------- ----------------
Net asset value per Ordinary Share
(pence) 61.49 72.35
------------------------------------ ---------------- ----------------
The Financial Statements of Maven Income and Growth VCT 3 PLC,
registered in England and Wales with number 04283350, were approved
by the Board of Directors and were signed on its behalf by:
Atul Devani
Director
1 March 2019
The accompanying Notes are an integral part of the Financial
Statements and can be found in full in the Annual Report.
Cash Flow Statement
For the Year Ended 30 November 2018
Year ended 30 November Year ended 30 November
2018 2017
GBP'000 GBP'000
------------------------------ ---------------------- ----------------------
Net cash flows from operating
activities* (335) (211)
Cash flows from investing
activities (3,904) (3,212)
Purchase of investments 7,652 11,432
Sale of investments
------------------------------ ---------------------- ----------------------
Net cash flows from investing
activities 3,748 8,220
------------------------------ ---------------------- ----------------------
Cash flows from financing
activities
Equity dividends paid (6,770) (7,421)
Issue of Ordinary Shares 15,516 4,891
Repurchase of Ordinary Shares (426) (502)
------------------------------ ---------------------- ----------------------
Net cash flows from financing
activities 8,320 (3,032)
------------------------------ ---------------------- ----------------------
Net increase in cash 11,733 4,977
------------------------------ ---------------------- ----------------------
Cash at beginning of year 9,246 4,269
Cash at end of year 20,979 9,246
* Refer to Note 15 in the Annual Report for reclassification in
the current and prior year.
The accompanying Notes are an integral part of the Financial
Statements and can be found in full in the Annual Report.
Notes to the Financial Statements
For the Year Ended 30 November 2018
1. Accounting Policies
The Company is a public limited company, incorporated in England
and Wales and its registered office is shown in the Annual
Report.
(a) Basis of preparation
The Financial Statements have been prepared under the historical
cost convention, as modified by the revaluation of investments and
in accordance with FRS 102, The Financial Reporting Standard
applicable in the UK and Republic of Ireland, and in accordance
with the Statement of Recommended Practice for Investment Trust
Companies and Venture Capital Trusts (the SORP) issued by the AIC
in November 2014.
(b) Income
Dividends receivable on equity shares and unit trusts are
treated as revenue for the period on an ex-dividend basis. Where no
ex-dividend date is available dividends receivable on or before the
year end are treated as revenue for the period. Provision is made
for any dividends not expected to be received. The fixed returns on
debt securities and non-equity shares are recognised on a time
apportionment basis so as to reflect the effective interest rate on
the debt securities and shares. Provision is made for any income
not expected to be received. Interest receivable from cash and
short-term deposits and interest payable are accrued to the end of
the year.
(c) Expenses
All expenses are accounted for on an accruals basis and charged
to the Income Statement. Expenses are charged through the revenue
account except as follows:
-- expenses which are incidental to the acquisition and disposal
of an investment are charged to capital; and
-- expenses are charged to realised capital reserves where a
connection with the maintenance or enhancement of the value of the
investments can be demonstrated. In this respect, the investment
management fee has been allocated 20% to revenue and 80% to
realised capital reserves to reflect the Company's investment
policy and prospective income and capital growth.
(d) Taxation
Deferred taxation is recognised in respect of all timing
differences that have originated but not reversed at the balance
sheet date, where transactions or events that result in an
obligation to pay more tax in the future or right to pay less tax
in the future have occurred at the balance sheet date. This is
subject to deferred tax assets only being recognised if it is
considered more likely than not that there will be suitable profits
from which the future reversal of the underlying timing differences
can be deducted. Timing differences are differences arising between
the Company's taxable profits and its results as stated in the
Financial Statements which are capable of reversal in one or more
subsequent periods.
Deferred tax is measured on a non-discounted basis at the tax
rates that are expected to apply in the periods in which timing
differences are expected to reverse, based on tax rates and laws
enacted or substantively enacted at the balance sheet date.
The tax effect of different items of income/gain and
expenditure/loss is allocated between capital reserves and revenue
account on the same basis as the particular item to which it
relates, using the Company's effective rate of tax for the
period.
UK corporation tax is provided at amounts expected to be
paid/recovered using the tax rates and laws that have been enacted
or substantively enacted at the balance sheet date.
(e) Investments
In valuing unlisted investments the Directors follow the
criteria set out below. These procedures comply with the revised
International Private Equity and Venture Capital Valuation
Guidelines (IPEVCV) for the valuation of private equity and venture
capital investments. Investments are recognised at their trade date
and are designated by the Directors as fair value through profit
and loss. At subsequent reporting dates, investments are valued at
fair value, which represents the Directors' view of the amount for
which an asset could be exchanged between knowledgeable and willing
parties in an arm's length transaction. This does not assume that
the underlying business is saleable at the reporting date or that
its current shareholders have an intention to sell their holding in
the near future.
A financial asset or liability is generally derecognised when
the contract that gives rise to it is settled, sold, cancelled or
expires.
1. For early stage investments completed in the reporting
period, fair value is determined using the Price of Recent
Investment Method, except that adjustments are made when there has
been a material change in the trading circumstances of the investee
company.
2. Whenever practical, recent investments will be valued by
reference to a material arm's length transaction or a quoted
price.
3. Mature companies are valued by applying a multiple to their
prospective earnings to determine the enterprise value of the
company.
3.1 To obtain a valuation of the total ordinary share capital
held by management and the institutional investors, the value of
third party debt, institutional loan stock, debentures and
preference share capital is deducted from the enterprise value. The
effect of any performance related mechanisms is taken into account
when determining the value of the ordinary share capital.
3.2 Preference shares, debentures and loan stock are valued
using the Price of Recent Investment Method. When a redemption
premium has accrued, this will only be valued if there is a
reasonable prospect of it being paid. Preference shares which carry
a right to convert into ordinary share capital are valued at the
higher of the Price of Recent Investment Method basis and the
price/earnings basis.
4. In the absence of evidence of a deterioration, or strong
defensible evidence of an increase in value, the fair value is
determined to be that reported at the previous balance sheet
date.
5. All unlisted investments are valued individually by the
portfolio management team of Maven Capital Partners UK LLP. The
resultant valuations are subject to detailed scrutiny and approval
by the Directors of the Company.
6. In accordance with normal market practice, investments listed
on AIM or a recognised stock exchange are valued at their bid
market price.
(f) Fair value measurement
Fair value is defined as the price that the Company would
receive upon selling an investment in a timely transaction to an
independent buyer in the principal or the most advantageous market
of the investment. A three-tier hierarchy has been established to
maximise the use of observable market data and minimise the use of
unobservable inputs and to establish classification of fair value
measurements for disclosure purposes. Inputs refer broadly to the
assumptions that market participants would use in pricing the asset
or liability, including assumptions about risk, for example, the
risk inherent in a particular valuation technique used to measure
fair value, including such a pricing model and/or the risk inherent
in the inputs to the valuation technique. Inputs may be observable
or unobservable.
Observable inputs are inputs that reflect the assumptions market
participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the
reporting entity.
Unobservable inputs are inputs that reflect the reporting
entity's own assumptions about the assumptions market participants
would use in pricing the asset or liability developed based on best
information available in the circumstances.
The three-tier hierarchy of inputs is summarised in the three
broad levels listed below.
-- Level 1 - the unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at the
measurement date;
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable (ie developed using market data) for
the asset or liability, either directly or indirectly; and
-- Level 3 - inputs are unobservable (ie for which market data
is unavailable) for the asset or liability.
(g) Gains and losses on investments
When the Company sells or revalues its investments during the
year, any gains or losses arising are credited/charged to the
Income Statement.
(h) Critical accounting judgements and key sources of estimation uncertainty
Disclosure is required of judgements and estimates made by the
Board and the Manager in applying the accounting policies that have
a significant effect on the Financial Statements. The area
involving the highest degree of judgement and estimates is the
valuation of unlisted investments recognised in Note 8 in the
Annual Report and explained in Note 1(e) above.
In the opinion of the Board and the Manager, there are no
critical accounting judgements.
Reserves
Share premium account
The share premium account represents the premium above nominal
value received by the Company on issuing shares net of issue
costs.
Capital reserves
Gains or losses on investments realised in the year that have
been recognised in the Income Statement are transferred to the
capital reserve realised account on disposal. Furthermore, any
prior unrealised gains or losses on such investments are
transferred from the capital reserve unrealised account to the
capital reserve realised account on disposal.
Increases and decreases in the fair value of investments are
recognised in the Income Statement and are then transferred to the
capital reserve unrealised account. The capital reserve realised
account also represents capital dividends, capital investment
management fees and the tax effect of capital items.
Special distributable reserve
The total cost to the Company of the repurchase and cancellation
of shares is represented in the special distributable reserve
account.
Capital redemption reserve
The nominal value of shares repurchased and cancelled is
represented in the capital redemption reserve.
Revenue reserve
The revenue reserve represents accumulated profits retained by
the Company that have not been distributed to Shareholders as a
dividend.
Return per Ordinary Share Year ended 30 November Year ended 30 November
2018 2017
-------------------------- ---------------------- ----------------------
The returns per share have 62,607,301 40,706,349
been
based on the following GBP336,000 GBP488,000
figures:
Weighted average number (GBP262,000) (GBP461,000)
of
Ordinary Shares
Revenue return
Capital return
-------------------------- ---------------------- ----------------------
Total return GBP74,000 GBP27,000
-------------------------- ---------------------- ----------------------
Net asset value per Ordinary Share
The net asset value per Ordinary Share as at 30 November 2018
has been calculated using the number of Ordinary Shares in issue at
that date of 68,973,462 (2017: 47,016,945).
Directors' Responsibility Statement
Each Director believes that, to the best of their knowledge:
-- the Financial Statements have been prepared in accordance
with the applicable accounting standards and give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company as at 30 November 2018 and for the year to that
date;
-- the Directors' Report includes a fair review of the
development and performance of the Company, together with a
description of the principal risks and uncertainties that it faces;
and
-- the Annual Report and Financial Statements, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Company's position and
performance, business model and strategy.
Other information
The Annual General Meeting will be held on Wednesday 10 April
2019, commencing at 11.00am, at Maven Capital Partners UK LLP,
Fifth Floor, 1-2 Royal Exchange Buildings, London EC3V 3LF.
The Annual Report and Financial Statements for the year ended 30
November 2018 will be issued to Shareholders and filed with the
Registrar of Companies and issued to Shareholders in due
course.
The financial information contained within this announcement
does not constitute the Company's statutory Financial Statements as
defined in the Companies Act 2006. The statutory Financial
Statements for the year ended 30 November 2017 have been delivered
to the Registrar of Companies and contained an audit report which
was unqualified and did not constitute statements under S498(2) or
S498(3) of the Companies Act 2006.
Copies of this announcement, and of the Annual Report and
Financial Statements for the year ended 30 November 2018, will be
available, in due course, to the public at the office of Maven
Capital Partners UK LLP, 205 West George Street, Glasgow G2 2LW; at
the registered office of the Company, 1-2 Royal Exchange Buildings,
London EC3V 3LF and on the Company's website at
www.mavencp.com/migvct3.
Neither the content of the Company's website nor the contents of
any website accessible from hyperlinks on the Company's website (or
any other website) is incorporated into, or forms part of, this
announcement.
The Annual Report will shortly be submitted to the National
Storage Mechanism and will be available for inspection at:
www.morningstar.co.uk/uk/NSM.
By Order of the Board
Maven Capital Partners UK LLP
Secretary
1 March 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SSUFLFFUSELD
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